Buck drops ahead of U.S. labor data release, Warsh "dovishness"
The U.S. Dollar is in retreat this morning as markets react to labor data and prepare for a cooling of activity ahead of the July 4th weekend.
Investors and traders are watching for signs of weakening that could lower expectations surrounding Fed interest-rate hikes for the remainder of the year. Some strategists argue that it feels somewhat inconsistent for markets to continue pricing in at least one more increase in borrowing costs. While the economy has shown some steadiness, the effects of tariffs and ongoing tensions in the Middle East may not provide the stable environment needed for rate hikes to feel healthy. Meanwhile, Fed Chairman Kevin Warsh commented at the central bankers’ gathering in Sintra, Portugal, that inflation risks have come down.
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EUR
The Euro had a tough June, marking its worst month since the USD rally in March. Recent losses pushed the Euro to its lowest point since May 2025. Earlier today, the Eurozone released its May unemployment rate, which came in slightly lower than expected at 6.2% versus 6.3%. Friday will close out the week with the June S&P Global Composite Purchasing Managers’ Index. Perhaps a modest improvement in indicators can support the shared currency’s recovery after it slid almost 2.0% last month.